The poor not only die sooner, they also spend more of their lives with a disability, an "avoidable difference which is unacceptable and unfair", a government-ordered review into Britain's widening health inequalities said today.

Despite 10 years of the largest public spending increases on health since the creation of the NHS, and rising prosperity levels generally, people in England living in the poorest neighbourhoods will, on average, die seven years earlier than others living in the richest parts of Britain, the study finds.

Not only is life expectancy linked to social standing, but so is the time spent in good health: the average difference in "disability-free life expectancy" is now 17 years between those at the top and those at the bottom of the economic ladder, the report says.

The report, entitled Fair Society, Healthy Lives, says the government will fail to meet its promise to reduce the 10% mortality gap between deprived areas and the rest of the UK. For men in poor areas the gap has widened by 2%, and for women the figure is 11%.

Health inequality is now so pron­ounced that in the wealthiest area of London, a ward in Kensington and Chelsea, a man will now have a life expectancy of 88 years. A few miles away in Tottenham Green, north London, one of the capital's poorer wards, male life expectancy is 71 years, a period less than that found in Ecuador, China and Belize, countries all poorer with no national health systems.

Since poverty is relative, the lower life expectancies in the UK are "not those associated with destitution" but rather affluence and expectation. The poorer people suffer diseases related to inadequate diets, lack of exercise, smoking, poor pay, and job insecurity.

The effect is so striking that people with low levels of education have the highest levels of lung cancer.

The leading epidemiologist Prof Sir Michael Marmot, who led the review, said the need to flatten the "social gradient in health" was pressing, with up to 2.5m years of life being lost in England to those people dying prematurely each year. He suggested that given the stark inequalities the government could not raise the age of retirement to 68 as it proposed. "Three-quarters of the country do not have disability-free life expectancy [at 68]. So you have to address the inequalities for the bottom 75% of the country if you want to have a healthy population working at 68."

Although life expectancy for the worst off has improved in the last decade, by an extra 2.9 years, rising health inequality will mean the government will fail to hit key targets. The study says that the pledge to reduce the gap in the rate of infants who die before the age of one, in the general population, and that of manual workers' deaths to just 10%, will not be met. Instead the gap in the rate of infant mortality will rise to 25% by 2011.

Andy Burnham, the health secretary, said he accepted that the report showed there was more to do. "So we are looking to all corners of the community to work together and address the wider causes of poor health, and reduce health inequalities," he said.

The report says the conditions in which people are born, live, work and age, shape their health; what is needed is a reduction in the inequities in power and money that benefit the rich from birth. The report calls for a more "progressive tax system" noting that at present the poor bear 38% of their income in tax compared with 35% for the richest. While tax credits have lifted half a million children out of poverty since 1998, it is "imperative" the benefits system does not act as a disincentive to working, the report says.

It recommends developing standards for a minimum income for healthy living – that is, the lowest amount people can live on to enjoy a long, healthy life. ­Marmot's committee also calls for funds to cover a healthy diet, the cost of exercising (covering things such as trainers, bikes and access to swimming) and phone rentals.

Another recommendation is for parents to be at home in the first year of a child's life, perhaps by the mother taking paid leave over six months, followed by six months for the partner. The report also calls for an overall increase in the amount of money spent supporting children in the first few years of life. It points out that postnatal depression, children being read to daily and having a regular bedtime at the age of three, are all likely to relate to youngsters' chances of doing well in school. Action is needed in six key areas, it adds: this would include giving every child the best start in life, creating fair employment and encouraging people into work, and working to prevent people falling ill in the first place.

The report calls for national targets on life expectancy. Prof Ian ­Diamond, a member of the review and of the Economic and Social Research Council, says that the minimum would be to increase the lifetime of a poor person by "three years" in the next decade. "There's no reason why we cannot say that keeping people alive and healthy longer should not be government policy."

Graphic

Nick Bosenquet, professor of health policy at Imperial College, suggested the message should be "change lifestyles and behaviour", instead of "talk of more money and tax rises".• This article was amended on 16 February 2010. The original spoke of reducing the "iniquities" in power and money. This has been corrected.